48. (Departmental rates) The Houston Custom Tile Corporation has two departments:

Mixing and Drying. All jobs go through each department, and the company uses a job order costing system. The company applies overhead to jobs based on labor hours in Mixing and on machine hours in Drying. In December 2001, corporate management estimated the following production data for 2002 in setting its predetermined overhead rates:

Mixing Drying Machine hours 7,200 104,000 Direct labor hours 88,000 12,400 Departmental overhead $374,000 $494,000 Two jobs completed during 2002 were #2296 and #2297. The job order cost sheets showed the following information about these jobs:

Job #2296 Job #2297 Direct material cost $4,875 $6,300 Direct labor hours—Mixing 425 510 Machine hours—Mixing 40 45 Direct labor hours—Drying 20 23 Machine hours—Drying 110 125 Direct labor workers are paid $9 per hour in the Mixing Department and $22 per hour in Drying.

a. Compute the predetermined overhead rates used in Mixing and Drying for 2002.

b. Compute the direct labor cost associated with each job for both departments.

c. Compute the amount of overhead assigned to each job in each department.

d. Determine the total cost of Jobs #2296 and #2297.

e. Actual data for 2002 for each department follow. What is the amount of underapplied or overapplied overhead for each department for the year ended December 31, 2002?

Mixing Drying Machine hours 7,400 106,800 Direct labor hours 86,400 12,600 Overhead $362,000 $512,000